Contract farming configuration: Smallholders’ preferences for contract design attributes

Abebe, Gumataw Kifle; Bijman, Jos; Kemp, Ron; Omta, Onno; Tsegaye, Asrat

doi:10.1016/j.foodpol.2013.01.002

Cited by 178 publications

(170 citation statements)

References 65 publications

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“…Price risk hedging can also apply to inputs; in fact, Abene et al (2009) find that output risk reduction is less important compared to input risk reduction. Similarly, Wang, Zhang, and Wu (2011) find that for Chinese farmers, the primary motivation for contracting is not price risk management, but rather seeking better price offers and reducing marketing costs.…”

Section: Conceptual Frameworkmentioning

confidence: 99%

Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?

Briones¹

2015

World Development

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Philippine Institute for Development Studies Surian sa mga Pag-aaral Pangkaunlaran ng PilipinasThe PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are being circulated in a limited number of copies only for purposes of soliciting comments and suggestions for further refinements. The studies under the Series are unedited and unreviewed.The views and opinions expressed are those of the author(s) and do not necessarily reflect those of the Institute.Not for quotation without permission from the author(s) and the Institute. AbstractLinking small farmers to modern markets, whether domestically or for export, increasingly entails participation in modern supply chains coordinated by contract farming. Concerns have been raised regarding the possible disadvantages from contract farming facing small farmers. Most empirical work points to a positive correlation between participation in contract farming and net farm income. Such a correlation fails to correct for endogeneity of participation; few studies have performed multivariate analysis with such a correction. This case study, based on a survey of smallholders in the tobacco industry, seems to be the first such application for the Philippines. The study finds that, correcting for endogeneity, participation in contract farming causes a sizable increase in farm profitability; moreover participation appears to be biased towards smaller farm sizes. The findings are robust to the econometric method used and even definition of participation. This is further evidence to confirm that supply chains linking agribusiness with small farmers via contract schemes are a viable model of value addition and inclusive growth in rural areas. Policies should be implemented to support an enabling environment for expansion of supply chains.

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Section: Conceptual Frameworkmentioning

confidence: 99%

Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?

Briones¹

2015

World Development

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“…In analyzing supply relationships with biogas plants, the authors included contract duration and contracting partner as attributes in a CE. Abebe et al (2013) study preferences for different contract farming settings of smallholders in Ethopia.…”

Section: Monopolistic Market Structuresmentioning

confidence: 99%

Are consumers willing to pay more for electricity from cooperatives? Results from an online Choice Experiment in Germany

Sagebiel

Müller

Rommel

2014

Energy Research & Social Science

126

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“…Choice experiments are less costly to implement and have been used in recent studies to analyze smallholder preferences for contracts and particular contract terms and provisions. These studies evaluated preferences for hypothetical contract attributes related to output price and quality levels, the need for upfront investments, and the provision of training, credit, and inputs through the contracting company, among others (Blandon et al, 2009b;Schipmann and Qaim, 2011;Abebe et al, 2013). None of these studies looked at supermarket contracts, which often differ from those of export or processing companies.…”

Section: Introductionmentioning

confidence: 99%

Farmers’ preferences for supermarket contracts in Kenya

Ochieng

Veettil²,

Qaim

2017

Food Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWith the modernization of global agri-food systems, the role of contract farming is increasing. This also involves smallholder farmers in developing countries. While previous studies have looked at economic impacts of contract schemes on smallholder farmers, little is known about farmers' preferences for contracting in general, and for specific contract design attributes in particular. Better understanding farmers' preferences and constraints is important to make smallholder contract schemes more viable and beneficial. This article builds on a choice experiment to analyze farmers' preferences and preference heterogeneity for contracts in Kenya. In the study region, supermarkets use contracts to source for fresh vegetables directly from preferred suppliers. However, farmer dropout rates are high. Mixed logit models are estimated to examine farmers' attitudes towards critical contract design attributes. Having to deliver their harvest to urban supermarkets is costly; hence farmers require a significant output price markup. Farmers also dislike delayed payments that are commonplace in contract schemes. The most problematic contract attribute is related to unpredictable product rejection rates, which substantially add to farmers' risk. Designing contracts with lower transaction costs, more transparent quality grading, and fairer risk-sharing clauses could enhance smallholder participation in supermarket procurement channels.

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Contract farming configuration: Smallholders’ preferences for contract design attributes

Cited by 178 publications

References 65 publications

Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?

Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?

Are consumers willing to pay more for electricity from cooperatives? Results from an online Choice Experiment in Germany

Farmers’ preferences for supermarket contracts in Kenya

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